Date: 09/17/2000 1:18 AM
Dear Sirs,
Please read this example of how Market Makers are profiting from Manipulative
practices.
Market makers should have to report their short positions just as they do on
the
major exchanges. You treat the OTC as if it's a different kind of investment,
But it's not, the stocks go up and down like every other stocks, and people
can
invest hundreds of thousands of dollars into them as in any major market.
"Some
OTC stocks earn more per share than some Nasdaq stocks"
If you invested in start-up companies, I think you too would be sickened at
what's going on here.
Thank you
Mark Andersen
Please read:
By Jack Burney
Published by OTCNN.com
06/15/2000 10:15 AM CST
According to a Raging Bull poster that uses the alias DJ8, Symphony Telecom
International, Inc. (OTCBB: SYMY) Chairman and CEO Gilles A. Trahan recently
wrote a letter (which DJ8 posted online) that expressed his frustrations at
getting answers to questions he had about perceived irregularities in the
trading of his company's stock. In that letter Trahan apparently got a
startling
response from Gerry Rosen of Market Maker J. Alexander Securities (ALEX).
Rosen's direct response to Trahan's inquiring telephone calls was "I am a
market
maker, I can do whatever I like and I don't have to tell you my position."
THIS
IS SICKENING!
Unfortunately, Rosen is telling the absolute truth. And, that's what is
terribly
wrong in the OTCBB investing business.
Under present rules, a market maker CAN do whatever he likes to an OTCBB
stock,
and he doesn't have to tell you his position, because he isn't required to
disclose his short positions or his buy-sell ratios, only the volume he did
last
month.
The alleged suppression of Symphony stock by market makers was uncovered in
yesterday's article. In the above scenario, the market maker was simply
stating
his SEC/NASD-given right to manipulate OTCBB stocks as he pleases, because he
doesn't have to account to anyone. That's not the case with stocks listed on
the
major exchanges - short position disclosure is required for them.
Trahan reports about his attempt to call Rosen at ALEX in a letter to
Symphony's
Raging Bull message board. The entire letter can be read by clicking on the
following link:
http://www.ragingbull.com/mboard/boards.cgi?board=SYMY&read=1930
. OTC News Network has verified that the letter was indeed written by Mr.
Trahan.
"Mr. Rosen was very upset by my call," wrote Trahan, "hanging up on me after
my
introducing myself and stating that I understand ALEX is shorting SYMY. Upon
calling him back I was told 'I am a market maker, I can do whatever I like and
I
don't have to tell you my position.' I have personally never seen a stock get
beat up like this on a small cap company announcing acquisitions and a $100
million funding, but of course that is just my opinion. In the meantime the
company is exploring all legal avenues and will act accordingly."
One eloquent defender of the market makers charged that Symphony is "very weak
financially. In addition this company has an untried technology that sounds a
bit bogus." He said Symphony will have to "sell 10-million shares" to obtain
its
$100-million financing and this is what has driven the stock down. Point
taken,
but others think a firm with $100-million to build a business upon is
positioned
to grow.
The MM defender also said that "for the so called traders of SYMY to make such
a
big deal out of that makes them out as amateurs as well."
So, it's okay to screw investors if they are "amateurs?" That's the arrogant,
stock-snob attitude Rosen expressed, and he probably speaks for all those MMs
who are excessively shorting stocks.
The solution is to stop the arrogant manipulation of stock prices by imposing
the same disclosure rules on OTCBB stock as now apply to NASDAQ, NYSE and AMEX
stocks. Then market makers will have to do "whatever they please" in the cold
light of public scrutiny, and that's a different scenario altogether.
Section 15A(b)(6) of the Securities Act says that the rules of a national
securities association must be designed, among other things to prevent
fraudulent and manipulative acts and practices and to protect investors and
the
public interest, and perfect the mechanism of a free and open market.
Section 15A(b)(11) requires that association rules be designed to produce fair
and information quotations, and to prevent fictitious and misleading
quotations.
How many market makers run businesses that are contemptuous and in violation
of
the letter and spirit of the Act?
Meanwhile, the beat goes on, and OTC News Network is flooded with complaints
about market maker manipulation - "MMM" - all of which will be dealt with in
this series as time and space permit.